Supreme Court Rules In Bankruptcy Case

Posted on January 11, 2011 at 6:03pm by

Supreme Court Justice Elena Kagan has delivered her first majority opinion, siding with a credit card company in a bankruptcy case.

The dispute involved the 2005 bankruptcy law enacted by Congress to ensure that people who file for bankruptcy pay part of their debt if they can afford it. The lower courts have disagreed on how to calculate a debtor’s disposable income under the standardized methods specified in the law.

In the case before the court, a Nevada man named Jason Ransom, in filling out the forms, claimed the standard $471 monthly car payment b though he owned his car free and clear. The credit card company objected, noting that with the car repayment deduction, Ransom had just $210 per month in disposable income that could be used to repay his debt over five years, versus $681 in disposable income each month without the deduction.

By an 8-to-1 vote, the court agreed with the credit card company. Writing for the majority, Justice Kagan said that since Ransom had no actual monthly car payments, he could not claim the standard transportation ownership costs to defray his debt repayment. She noted that he was entitled to the standard vehicle operation costs.

Justice Antonin Scalia was the lone dissenter. He contendedB that Congress understood there would be occasional peculiarities when it chose to adopt a standardized system instead of a case-by-case analysis of each debtor.


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